Gridlock No More
How Regional Cooperation
Accelerate Regulatory Reform
The Case of Passenger Transport Sector
Pich Nitsmer, Ph.D.
Fiscal Policy Research Institute, Thailand
26 February 2007
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Presentation Outline
Policy and Regulatory Process
 Why sub-optimal?
 How to reform?
perhaps with the
support of …
Regional Cooperation
 Which forums and channels?
 What to be gained?
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Fiscal Policy Research Institute
Thailand’s Policy Process: Top-down
National Economic and Social Development Board
5-year
National Plan
Transport
1) Transport Ministry
Transport & Traffic Policy
& Planning Office
2) A Ministry
…
A Policy &
Planning Office
20) B Ministry
B Policy &
Planning Office
Incompetence
≠
Transport 5-year Plan
Policy
X
Policy
Y
Policy
Z
Implementation
Sub-optimal
Outcome
Interference
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Fiscal Policy Research Institute
Regulatory Process: Non-linear, Multi-agent
Department
(e.g. Land Transport Dep.)
Internal:
Safety, security
& scheduling
External: Price,
coverage &
social
requirement
External
Internal
External
Reg. Action
Imposed on
Operators
Commission
(e.g. Land Traffic Commission)




Transport Permanent-Sec.
Land Transport Director-General
Police Commissioner-General
Bangkok Governor
Problems
 Limited regulatory expertise
Can’t serve as
check & balance
tool b/c conflict of
interest
 Lack of inter-ministerial cooperation
 Resistance from vested interest
 Interference from rent-seeking public officials
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Regulatory Reform: Competition Enhancement
Risks of Privatization w/out Effective Regulatory Regime
 Shares majority-owned by govt  continued govt interference
 Share distribution through IPO ‘unfair’  capture & rent-seeking
 Operation unregulated  imbalance of economic & social ends
Short-term Implications
 To facilitate competition before privatization
(e.g. quality standard & target for phasing out subsidy)
 To strengthen regulatory muscles regardless of privatization
How?
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Reform: Independence and Other Conditions
Regulatory Independence: Separation from Operation & Policy
 Commission: Centralised?
 Enabling factors (e.g. regulatory capability): How?
Regulatory Check-and-Balance
 Regulatory Impact Assessment (ex-post & ex-ante)
 Transparency & Accountability
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Fiscal Policy Research Institute
Regional Cooperation: the Case of APEC
Expected Benefits from Regional Forum
 Capacity building: Experience & expertise sharing (existing)
 Regional institutional building: Developing regional vehicle for
independent policy evaluation (not yet materialised)
Bangkok Conference (2007) Proposal
 Hadi Soesastro: ‘Establishing an ongoing APEC Productivity and
Efficiency Commission … that has the capacity to respond to
requests by APEC and member economies for analysis of micropolicy and regulatory issues’.
Existing Mechanisms?
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APEC Channels: Existing Mechanisms
Possible Interactive Channels
Economic Committee
(Issue-specific - focusing on reform)
Transportation Working Group
(Sector-specific)
Trade & Investment Committee
Business Advisory Council
(Facilitator)
(Issue-specific - focusing on deregulation)
Organisational
Structure
Leaders’ Meeting
Business Advisory Council
Ministerial Meeting
Trade & Investment
Committee
Economic Committee
Experts Groups (11)
- Competition & Deregulation
Sectoral Ministerial Meeting
Working Groups (11)
- Transportation
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Economic Committee: Issue-specific
Mandate
 To promote structural reform by undertaking analysis & actionoriented work
Principle
Leaders’ Agenda to Implement Structural Reform (LAISR)
 Priorities in regulatory reform, economic & legal infrastructure,
competition policy, governance & public sector management
Capacity
Building
 Studies based on APEC-OECD Checklist on Regulatory Reform
 Seminars on competition policy as a sub-set of structural reform
LAISR Thematic Work Plan
Year
Focus
Issues
2005 2006
2007
Regulatory reform
-Sector specific
(e.g. transport)
2008
2009
Economic &
legal
infrastructure
2010
Stocktake of
progress on
reform
Public sector
governance
Competition
policy
all relevant to transport
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Trade & Investment Committee: Expert Group
Expert Group in Competition Policy and Deregulation
Mandate
 To enhance region’s competitive environment
Principle
Principles to Enhance Competition & Regulatory Reform
 Strengthening the functioning of markets
Capacity
Building
 Technical assistance & training in competition policy &
regulatory reform
 Competition policy & deregulation database
Function Overlapping?
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Transportation Working Group: Sector-specific
Mandate  To achieve liberalisation of transportation services & to
encourage sectoral development in Asia-Pacific while balancing
safety, security & social objectives, thus focusing on facilitation
of domestic policy regulation
Principle 2004 Transport Ministers Statements
 Ensuring a safe, secure, efficient, integrated and
environmentally sustainable transportation system for the
region
Capacity  Symposium on Intelligent Transport System Accessibility
Building
Very sector-specific but unrelated to the realm of regulation?
How to integrate sector-specific with issue-specific mechanisms then?
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Conclusion: Implications for Transport Value Chain
Component
mostly
state-run
regulated
Terminal
Infrastructure
Vehicle
Construction
Supply
Operation
Operation
what about here?
system integration
Capacity building through regional cooperation is also needed for procurement process
to reduce interference & develop local suppliers along the chain.
Ari Skytrain Station – 10 minutes from the FPRI
End of Presentation … Thank You
Fiscal Policy Research Institute
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